Some of you may recall that last year I wrote a blog about efficiency and how I was going to start timing my husband on household activities in order to collate data to see how efficient we are – well you’ll be pleased to know I’m still married! But seriously, since then I have spoken to many of you in respect of Operational Efficiency and what that really looks like in practice.
A common observation was the confusion between ‘creating efficiency’ and ‘cutting costs!’ Many companies throw the word efficiency around, but they don’t actually mean making things smarter with better outcomes. They mean cutting costs and, eventually headcount and their salary bill.
Now, that’s business as they say, and a fact of life! Outsourcing has been explored by many financial services businesses in the last 10 years, with some attempts being more successful than others. Outsourcing can effectively satisfy the cost cutting desire, however, through my experience, I certainly wouldn’t say it creates true efficiencies that some may have you believe.
Looking at efficiency as a cost cutting exercise, can detract from what becoming more efficient can actually mean to an operation. Looking at your business model and processes, alongside ways of working will create smarter ways of gaining the outcomes needed which in turn benefit both your customers and your employees.
The industry has made great strides over the past few years in respect of employees’ wellbeing and ensuring that individuals are happy in their workplace and role. However, it wasn’t until I managed a large team myself that I realised the importance of making processes more efficient and the effect this has on staff culture and morale. The ability to achieve an outcome smarter or quicker doesn’t always mean that the associated FTE needs to be reduced, rather it provides the opportunity to allow an employee to explore some cross-training or qualifications they desire to undertake. This provides growth for both the individual and company.
Process re-engineering is not something that happens much in Financial Services. I recently spoke with a paraplanner friend, and she was telling me about how her processes are long-winded and mundane and haven’t changed since the day she joined 12 years ago! At first, I was shocked but then I think back to my years in operations and if I really thought about it, I was in the same boat. I once remember a colleague saying to me that her father had processed cases in exactly the same way when he worked for the company 20 years before.
Changing and improving processes will mitigate risk, improve the outcome for the client and will also break the perception of people thinking that financial services is stagnant and not willing to change. We need to be enticing young, bright, and enthusiastic individuals into this fabulous sector, but how do we keep them engaged, interested, and excited if the processes they are expected to undertake haven’t been reviewed for 5 years plus?
Ultimately the goal for all firms is to ensure that the customer is receiving the best service that they possibly can, and their needs are met for the fee that they are paying. Consumer Duty was introduced to reinforce this. But many firms have not thought about how committing to look at efficiencies within their operation will support their Consumer Duty obligations. A review of a companies’ Target Operating Model and process efficiencies should mean opportunities to improve ease-of-use to the consumer, speed of transactions and the ability for the consumer to only have to do things once.
Data is of course at the heart of efficiency, and I would urge any firm who seriously wants to think about reviewing how efficient their operation is, to start with the data that they use. That is, how this data is stored, moved, manipulated, and used throughout their operation.
In conclusion, cost cutting can be the result of some efficiency implementation but there are so many other reasons as to why investing in operational efficiency is important, and it shouldn’t be the sole reason efficiency is explored. Working smarter not harder is something I am constantly reminded of by the next generation. It takes time, effort and unfortunately budget, but in my opinion, is much needed should we want this industry to keep striding forward.
